No legislative action is necessary to enact the so-called Cal-Build proposal, although the pension boards would have to approve. Angelides, as state treasurer, is a voting member of the boards.

Senate leader Don Perata,

D-Oakland, and Assembly Speaker Fabian Nez, D-Los Angeles, said they support the proposal as a supplement to infrastructure bonds planned by the governor and lawmakers.

This is a creative approach that could help address, along with the bond funding we are working on, Californias massive infrastructure need, said Perata. I hope the pension funds will take a close look at the steps treasurer Angelides is proposing.

Under the proposal, the state pension fund would be used to improve the states water supply, bridges, toll roads, tunnels and energy transmission, as well as to speed the movementof goods out of ports.

The treasurer said the Public Employees’ Retirement System and the State Teachers’ Retirement System should put a modest amount of its holdings “where there is an income stream, and we should get it, not private companies.”

The pensions would compete with private firms such as Sydney-based Macquarie Infrastructure Group, the world’s largest developer of toll roads, which are expanding in the United States as states and local governments eye ways to raise money for roads other than hiking taxes.

“The opportunity to invest in our infrastructure ought not to belong to foreign or private companies alone,” Angelides said. “We ought to have the opportunity to invest in these projects.”

The treasurer said investments should be aimed at urban, smart-growth projects and that there would be no risk to pension funds. A smaller version of the program, focused on investing in inner-city projects, has been successful, he said.

Infrastructure investment would earn up to 8 percent of the pension funds through mechanisms such as user fees, he said.

California’s two public pension funds are the two biggest such funds in the nation.

The California Public Employees’ Retirement System and the California State Teachers’ Retirement System manage a combined $337 billion portfolio. Angelides proposed public works investment would involve just 5 percent of the funds’ money.

Schwarzenegger proposed a $222 billion public works spending plan earlier this year, but the Legislature has not yet agreed to put any of the $68 billion in needed bonds on the ballot.

Last month, legislators missed a deadline to place a bond package on the June ballot. It’s still possible for elected officials to get something on the November ballot, but without a deadline looming soon, legislative leaders have no incentive to act quickly.